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Demand Table: Led Zep. I think per average income per capita in the U.S. is in the range. 1)Less than $20,000 9) $55,000-$60,000 2) $20,000-25,000 10) more than $60,000 3) $25,000-30,000 4) $30,000-35,000 5) $35,000-40,000 6)$ 40,000-45,000 7) $45,000-50,000
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I think per average income per capita in the U.S. is in the range 1)Less than $20,000 9) $55,000-$60,000 2) $20,000-25,000 10) more than $60,000 3) $25,000-30,000 4) $30,000-35,000 5) $35,000-40,000 6)$ 40,000-45,000 7) $45,000-50,000 8) $50,000-$55,000
I think per average income per capita in the U.S. is in the range 1)Less than $20,000 9) $55,000-$60,000 2) $20,000-25,000 10) more than $60,000 3) $25,000-30,000 4) $30,000-35,000 5) $35,000-40,000 6)$ 40,000-45,000 7) $45,000-50,000 8) $50,000-$55,000
Correct answer U.S. Per capita income in 2006 was about $43,000.
If the average value product of labor is greater than the wage, a firm can increase its profits by hiring more labor. • True • False
Example: Wage is $25 • With 4 workers, Avg Val Product is $90. • That exceeds the wage. • Will profits increase from hiring a fourth worker? • No. See table.
A profit maximizing firm will choose the amount of labor that maximizes the marginal value product of labor. • True • False
Example: Wage is $25 • To maximize Marginal Value Product hire 1 • To maximize profits, hire 3. • What does Marginal value product rule say? • Hire additional labor so long as marginal value product exceeds the wage.
If this firm maximizes profitsby hiring 3 workers, the wage must be between: • $40 and $60 • $85 and $120 • $60 and $100 • $60 and $80 • $100 and $113.33
Why is this? • According to the marginal profit rule, Firm should add workers so long as marginal value product of labor exceeds wage. Marginal value product of third laborer is $60, marginal value product of 4th is $40. If wage is between $40 and $60, it pays to add third laborer, but not a 4th.
